Ohio | ||
(State or Other Jurisdiction of Incorporation)
|
001-06249 | 34-6513657 | |
(Commission File Number) | (I.R.S. Employer Identification No.) | |
7 Bulfinch Place, Suite 500, P.O. Box 9507, Boston, Massachusetts | 02114 | |
(Address of Principal Executive Offices) | (Zip Code) | |
(617) 570-4614
|
||
(Registrant's Telephone Number, Including Area Code)
|
n/a |
(Former Name or Former Address, if Changed Since Last Report)
|
o
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFT|R 230.425)
|
o
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
o
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
o
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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(1)
|
Unaudited Combined Statement of Revenues and Certain Expenses for the nine months ended September 30, 2013
|
|
(2)
|
Audited Combined Statement of Revenues and Certain Expenses for the year ended December 31, 2012
|
Nine months ended
|
Year ended
|
|||||||
September 30, 2013
|
December 31, 2012
|
|||||||
(unaudited)
|
||||||||
Revenues
|
||||||||
Rental Revenue
|
$ | 13,978 | $ | 12,733 | ||||
Other Revenue
|
792 | 872 | ||||||
Total revenue
|
14,770 | 13,605 | ||||||
Certain Expenses
|
||||||||
Certain operating expenses
|
3,519 | 3,678 | ||||||
Maintenance
|
2,427 | 3,021 | ||||||
Real estate taxes
|
2,650 | 2,745 | ||||||
Total certain expenses
|
8,596 | 9,444 | ||||||
Revenue in excess of certain expenses
|
$ | 6,174 | $ | 4,161 |
1.
|
Organization
|
2.
|
Significant Accounting Policies
|
3.
|
Commitments and Contingencies
|
4.
|
Unaudited Interim Combined Statement of Revenue and Certain Expenses
|
5.
|
Subsequent Events
|
Historical
|
Winthrop
|
|||||||||||||
Winthrop
|
Pro Forma
|
Realty Trust
|
||||||||||||
ASSETS
|
Realty Trust (A)
|
Adjustments
|
Pro Forma
|
|||||||||||
Investments in real estate, at cost
|
||||||||||||||
Land
|
$ | 56,894 | $ | 26,805 |
(B)
|
$ | 83,699 | |||||||
Buildings and improvements
|
380,240 | 216,669 |
(B)
|
596,909 | ||||||||||
437,134 | 243,474 | 680,608 | ||||||||||||
Less: accumulated depreciation
|
(55,195 | ) | - | (55,195 | ) | |||||||||
Investments in real estate, net (variable interest entities $65,029)
|
381,939 | 243,474 | 625,413 | |||||||||||
Cash and cash equivalents
|
165,762 | (71,733 | ) |
(C)
|
110,394 | |||||||||
16,365 |
(D)
|
|||||||||||||
Restricted cash held in escrows (variable interest entities $6,637)
|
19,084 | - | 19,084 | |||||||||||
Loans receivable, net
|
108,163 | - | 108,163 | |||||||||||
Secured financing receivable
|
30,395 | - | 30,395 | |||||||||||
Accounts receivable, net of allowances of $478
|
997 | - | 997 | |||||||||||
Accrued rental income
|
19,205 | - | 19,205 | |||||||||||
Securities carried at fair value
|
7,074 | - | 7,074 | |||||||||||
Loan securities carried at fair value
|
226 | - | 226 | |||||||||||
Preferred equity investments
|
12,703 | - | 12,703 | |||||||||||
Equity investments
|
139,061 | - | 139,061 | |||||||||||
Lease intangibles, net (variable interest entities $20,059)
|
48,774 | 2,909 |
(B)
|
51,683 | ||||||||||
Deferred financing costs, net
|
4,546 | 2,108 |
(C)
|
6,654 | ||||||||||
Other assets
|
28,135 | (25,309 | ) |
(C)
|
2,826 | |||||||||
Assets held for sale
|
2,421 | - | 2,421 | |||||||||||
TOTAL ASSETS
|
$ | 968,485 | $ | 167,814 | $ | 1,136,299 | ||||||||
LIABILITIES
|
||||||||||||||
Mortgage loans payable (variable interest entities $65,836)
|
$ | 308,049 | $ | 150,000 |
(C)
|
$ | 458,049 | |||||||
Senior notes payable
|
86,250 | - | 86,250 | |||||||||||
Secured financings
|
29,150 | - | 29,150 | |||||||||||
Notes payable (variable interest entites of $864)
|
1,664 | - | 1,664 | |||||||||||
Accounts payable, accrued liabilities and other liabilities
|
21,522 | 2,394 |
(C)
|
23,916 | ||||||||||
Related party fees payable
|
2,693 | - | 2,693 | |||||||||||
Dividends payable
|
8,804 | - | 8,804 | |||||||||||
Deferred income
|
995 | - | 995 | |||||||||||
Below market lease intangibles, net (variable interest entities $605)
|
2,280 | 383 |
(B)
|
2,663 | ||||||||||
TOTAL LIABILITIES
|
461,407 | 152,777 | 614,184 | |||||||||||
COMMITMENTS AND CONTINGENCIES
|
||||||||||||||
EQUITY
|
||||||||||||||
Winthrop Realty Trust Shareholders’ Equity:
|
||||||||||||||
Series D Cumulative Redeemable Preferred Shares, $25 per share liquidation preference, 5,060,000 shares authorized and 4,820,000 shares both issued and outstanding at September 30, 2013
|
120,500 | - | 120,500 | |||||||||||
Common Shares of Beneficial Interest, $1 par, unlimited shares authorized; 36,397,949 both issued and outstanding at September 30,
|
35,798 | - | 35,798 | |||||||||||
Additional paid-in capital
|
646,620 | - | 646,620 | |||||||||||
Accumulated distributions in excess of net income
|
(308,661 | ) | (1,328 | ) |
(C)
|
(309,989 | ) | |||||||
Accumulated other comprehensive loss
|
(70 | ) | - | (70 | ) | |||||||||
Total Winthrop Realty Trust Shareholders’ Equity
|
494,187 | (1,328 | ) | 492,859 | ||||||||||
Non-controlling interests
|
12,891 | 16,365 |
(D)
|
29,256 | ||||||||||
Total Equity
|
507,078 | 15,037 | 522,115 | |||||||||||
TOTAL LIABILITIES AND EQUITY
|
$ | 968,485 | $ | 167,814 | $ | 1,136,299 |
Historical
|
||||||||||||||||||||||||||
Winthrop
|
Total Pro
|
Winthrop
|
||||||||||||||||||||||||
Realty Trust
|
Acquired
|
Pro Forma
|
Forma
|
Realty Trust
|
||||||||||||||||||||||
(E)
|
Properties (F)
|
Adjustments
|
Adjustments
|
Pro Forma
|
||||||||||||||||||||||
Revenue
|
||||||||||||||||||||||||||
Rents and reimbursements
|
$ | 51,375 | $ | 13,605 | $ | 367 |
(G)
|
$ | 13,972 | $ | 65,347 | |||||||||||||||
Interest, dividends and discount accretion
|
21,123 | - | - | - | 21,123 | |||||||||||||||||||||
72,498 | 13,605 | 367 | 13,972 | 86,470 | ||||||||||||||||||||||
Expenses
|
||||||||||||||||||||||||||
Property operating
|
15,666 | 6,699 | 353 |
(H)
|
7,052 | 22,718 | ||||||||||||||||||||
Real estate taxes
|
4,765 | 2,745 | - | 2,745 | 7,510 | |||||||||||||||||||||
Depreciation and amortization
|
17,666 | - | 8,712 |
(I)
|
8,712 | 26,378 | ||||||||||||||||||||
Interest
|
17,658 | - | 4,805 |
(J)
|
4,805 | 22,463 | ||||||||||||||||||||
Impairment loss on investment in real estate
|
2,562 | - | - | - | 2,562 | |||||||||||||||||||||
General and administrative
|
3,561 | - | - | - | 3,561 | |||||||||||||||||||||
Related party fees
|
8,953 | - | - | - | 8,953 | |||||||||||||||||||||
Transaction costs
|
421 | - | - |
(K)
|
- | 421 | ||||||||||||||||||||
State and local taxes
|
234 | - | - | - | 234 | |||||||||||||||||||||
71,486 | 9,444 | 13,870 | 23,314 | 94,800 | ||||||||||||||||||||||
Other income (loss)
|
||||||||||||||||||||||||||
Equity in income of equity investments
|
14,843 | - | - | - | 14,843 | |||||||||||||||||||||
Realized gain on sale of securities carried at fair value
|
41 | - | - | - | 41 | |||||||||||||||||||||
Unrealized gain on securities carried at fair value
|
6,916 | - | - | - | 6,916 | |||||||||||||||||||||
Loss on extinguishment of debt, net
|
(121 | ) | - | - | - | (121 | ) | |||||||||||||||||||
Realized gain on loan securities carried at fair value
|
614 | - | - | - | 614 | |||||||||||||||||||||
Unrealized gain on loan securities carried at fair value
|
447 | - | - | - | 447 | |||||||||||||||||||||
Interest and other income
|
699 | - | - | - | 699 | |||||||||||||||||||||
23,439 | - | - | - | 23,439 | ||||||||||||||||||||||
Income (loss) from continuing operations
|
24,451 | 4,161 | (13,503 | ) | (9,342 | ) | 15,109 | |||||||||||||||||||
Discontinued operations
|
||||||||||||||||||||||||||
Net loss from discontinued operations
|
(67 | ) | - | (67 | ) | |||||||||||||||||||||
Consolidated net income (loss)
|
24,384 | (9,342 | ) | 15,042 | ||||||||||||||||||||||
Net loss attributable to non-controlling interest
|
247 | 1,523 |
(L)
|
1,770 | ||||||||||||||||||||||
Net income (loss) attributable to Winthrop Realty Trust
|
24,631 | (7,819 | ) | 16,812 | ||||||||||||||||||||||
Preferred dividend of Series D Preferred Shares
|
(9,285 | ) | - | (9,285 | ) | |||||||||||||||||||||
Net income (loss) attributable to Common Shares
|
$ | 15,346 | $ | (7,819 | ) | $ | 7,527 | |||||||||||||||||||
Per Common Share data - Basic
|
||||||||||||||||||||||||||
Income from continuing operations
|
$ | 0.46 | $ | 0.23 | ||||||||||||||||||||||
Loss from discontinued operations
|
- | - | ||||||||||||||||||||||||
Net income attributable to Common Shares
|
$ | 0.46 | $ | 0.23 |
(M)
|
|||||||||||||||||||||
Per Common Share data - Diluted
|
||||||||||||||||||||||||||
Income from continuing operations
|
$ | 0.46 | $ | 0.23 | ||||||||||||||||||||||
Loss from discontinued operations
|
- | - | ||||||||||||||||||||||||
Net income attributable to Common Shares
|
$ | 0.46 | $ | 0.23 |
(M)
|
|||||||||||||||||||||
Basic Weighted-Average Common Shares
|
33,062 | 33,062 | ||||||||||||||||||||||||
Diluted Weighted-Average Common Shares
|
33,062 | 33,062 |
Historical |
Acquired
|
Total Pro
|
Winthrop | |||||||||||||||||||||||
Winthrop Realty
|
Properties
|
Pro Forma
|
Forma |
Realty Trust
|
||||||||||||||||||||||
Trust (N) | (O) |
Adjustments
|
Adjustments
|
Pro Forma | ||||||||||||||||||||||
Revenue
|
||||||||||||||||||||||||||
Rents and reimbursements
|
$ | 45,026 | $ | 14,770 | $ | (9 | ) |
(G)
|
$ | 14,761 | $ | 59,787 | ||||||||||||||
Interest, dividends and discount accretion
|
13,545 | - | - | - | 13,545 | |||||||||||||||||||||
58,571 | 14,770 | (9 | ) | 14,761 | 73,332 | |||||||||||||||||||||
Expenses
|
||||||||||||||||||||||||||
Property operating
|
14,697 | 5,946 | 338 |
(H)
|
6,284 | 20,981 | ||||||||||||||||||||
Real estate taxes
|
4,184 | 2,650 | - | 2,650 | 6,834 | |||||||||||||||||||||
Depreciation and amortization
|
14,703 | - | 4,483 |
(I)
|
4,483 | 19,186 | ||||||||||||||||||||
Interest
|
18,175 | - | 3,587 |
(J)
|
3,587 | 21,762 | ||||||||||||||||||||
General and administrative
|
3,058 | - | - | - | 3,058 | |||||||||||||||||||||
Related party fees
|
6,866 | - | - | - | 6,866 | |||||||||||||||||||||
Transaction costs
|
158 | - | - |
(K)
|
- | 158 | ||||||||||||||||||||
State and local taxes
|
227 | - | - | - | 227 | |||||||||||||||||||||
62,068 | 8,596 | 8,408 | 17,004 | 79,072 | ||||||||||||||||||||||
Other income (loss)
|
||||||||||||||||||||||||||
Equity in income of equity investments
|
26,249 | - | - | - | 26,249 | |||||||||||||||||||||
Earnings from preferred equity investments
|
576 | - | - | - | 576 | |||||||||||||||||||||
Realized loss on sale of securities carried at fair value
|
(133 | ) | - | - | - | (133 | ) | |||||||||||||||||||
Unrealized loss on securities carried at fair value
|
(142 | ) | - | - | - | (142 | ) | |||||||||||||||||||
Unrealized gain on loan securities carried at fair value
|
215 | - | - | - | 215 | |||||||||||||||||||||
Settlement expense
|
(150 | ) | - | - | - | (150 | ) | |||||||||||||||||||
Interest income
|
286 | - | - | - | 286 | |||||||||||||||||||||
26,901 | - | - | - | 26,901 | ||||||||||||||||||||||
Income (loss) from continuing operations
|
23,404 | 6,174 | (8,417 | ) | (2,243 | ) | 21,161 | |||||||||||||||||||
Discontinued operations
|
||||||||||||||||||||||||||
Income from discontinued operations
|
8,025 | - | 8,025 | |||||||||||||||||||||||
Net income (loss)
|
31,429 | (2,243 | ) | 29,186 | ||||||||||||||||||||||
Net loss attributable to non-controlling interest
|
2,419 | 366 |
(L)
|
2,785 | ||||||||||||||||||||||
Net income (loss) attributable to Winthrop Realty Trust
|
33,848 | (1,877 | ) | 31,971 | ||||||||||||||||||||||
Preferred dividend of Series D Preferred Shares
|
(8,360 | ) | - | (8,360 | ) | |||||||||||||||||||||
Amount allocated to Restricted Common Shares
|
(235 | ) | 4 | (231 | ) | |||||||||||||||||||||
Net income (loss) attributable to Common Shares
|
$ | 25,253 | $ | (1,873 | ) | $ | 23,380 | |||||||||||||||||||
Per Common Share data - Basic
|
||||||||||||||||||||||||||
Income from continuing operations
|
$ | 0.52 | $ | 0.46 | ||||||||||||||||||||||
Income from discontinued operations
|
0.24 | 0.24 | ||||||||||||||||||||||||
Net income attributable to Common Shares
|
$ | 0.76 | $ | 0.70 |
(P)
|
|||||||||||||||||||||
Per Common Share data - Diluted
|
||||||||||||||||||||||||||
Income from continuing operations
|
$ | 0.52 | $ | 0.46 | ||||||||||||||||||||||
Income from discontinued operations
|
0.24 | 0.24 | ||||||||||||||||||||||||
Net income attributable to Common Shares
|
$ | 0.76 | $ | 0.70 |
(P)
|
|||||||||||||||||||||
Basic Weighted-Average Common Shares
|
33,047 | 33,047 | ||||||||||||||||||||||||
Diluted Weighted-Average Common Shares
|
33,089 | 33,089 |
(A)
|
Reflects the historical unaudited consolidated balance sheet for the Trust as of September 30, 2013.
|
(B)
|
Reflects the provisional purchase accounting of the Acquired Properties which were acquired on October 31, 2013. The purchase price of the Acquired Properties is allocated $26,805 to land, $216,669 to buildings and improvements, $2,609 to in-place lease intangibles, $251 to leasing cost lease intangibles, $49 to above market lease intangible assets, and $383 to below market lease intangible liabilities.
|
(C)
|
Reflects the funding for the acquisition of the Acquired Properties which closed on October 31, 2013. Acquisition related costs of $1,328 were expensed as incurred in the fourth quarter of 2013 and are reflected as a pro forma adjustment to accumulated distributions in excess of net income. As part of the acquisition, the Trust recorded prepaid expenses (included with other assets) of $291 and assumed $2,394 of accounts payable and accrued liabilities. The Trust funded the acquisition with deposits of $25,600 made prior to September 30, 2013, a new first mortgage loan of $150,000 and cash on hand of $71,733. Deferred financing costs incurred in connection with obtaining the new first mortgage totaled $2,108.
|
(D)
|
Reflects the sale of the 16.3% interest in the venture for $16,365 which closed on November 6, 2013.
|
(E)
|
Reflects the historical audited consolidated statement of operations for the Trust for the year ended December 31, 2012.
|
(F)
|
Reflects the combined historical revenue and certain expenses of the Acquired Properties for the year ended December 31, 2012.
|
(G)
|
Reflects amortization of acquired in-place above and below market leases at their fair value over the weighted average remaining lease term as a result of purchase accounting adjustments. The residential in-place leases have a weighted average remaining lease term of six months and the retail in-place above market lease has a remaining lease term of 44 months.
|
(H)
|
Reflects the property management fees of the Acquired Properties as if the management contracts were in place as of January 1, 2012. Each of the four properties is subject to individual property management agreements. Fees range from 2.0% - 2.75% of monthly gross receipts.
|
(I)
|
Reflects depreciation and amortization related to each of the Acquired Properties, as appropriate. The purchase price of the Acquired Properties is allocated $26,805 to land, $1,895 to furniture and fixtures, $214,774 to buildings and improvements, $2,609 to in-place lease intangibles and $251 to leasing cost lease intangibles. The furniture and fixtures have estimated useful lives ranging from four to seven years and buildings have estimated useful lives ranging from 30 to 40 years. Intangibles are amortized over a period of six months to 44 months based on the remaining life of the related leases.
|
(J)
|
Represents the interest expense and amortization of associated deferred loan costs of the $150,000 mortgage loan obtained in connection with the acquisition of the Acquired Properties as if the debt was obtained on January 1, 2012. The first mortgage bears interest at LIBOR plus 2% per annum, requires monthly payments of interest only, has an initial term of three years and provides for two one-year extensions. Simultaneously with the financing, the venture entered into an interest rate swap agreement which effectively fixes LIBOR at 0.69% through the initial three year term of the loan.
|
(K)
|
The acquisition costs of $1,328 expensed in connection with the acquisition are non-recurring and are not considered a pro forma adjustment. These acquisition costs were incurred and recorded in the fourth quarter of 2013.
|
(L)
|
Reflects the adjustment to non-controlling interest representing the 16.3% interest in the venture that owns the Acquired Properties sold to an unaffiliated third party on November 6, 2013.
|
(M)
|
Pro forma income per Common Share is calculated in accordance with relevant accounting guidance for participating securities and the two class method and is based on the weighted average number of Common Shares outstanding during 2012. The reconciliation of earnings attributable to Common Shares outstanding for the basic and diluted earnings per share calculation is as follows:
|
For the Year Ended
|
||||
December 31, 2012
|
||||
Income from continuing operations
|
$ | 15,109 | ||
Loss attributable to non-controlling interest
|
1,770 | |||
Preferred dividend on Series D Preferred Shares
|
(9,285 | ) | ||
Income from continuing operations applicable to Common Shares
|
7,594 | |||
Loss from discontinued operations
|
(67 | ) | ||
Net income attributable to Common Shares
|
$ | 7,527 | ||
Basic weighted-average Common Shares
|
33,062 | |||
Income from continuing operations per Common Share - Basic
|
$ | 0.23 | ||
Loss from discontinued operations per Common Share - Basic
|
- | |||
Net income attributable to Common Shares - Basic
|
$ | 0.23 | ||
Basic weighted-average Common Shares
|
33,062 | |||
Stock options
|
- | |||
Diluted weighted-average Common Shares
|
33,062 | |||
Income from continuing operations per Common Share - Diluted
|
$ | 0.23 | ||
Loss from discontinued operations per Common Share - Diluted
|
- | |||
Net income attributable to Common Shares - Diluted
|
$ | 0.23 |
(N)
|
Reflects the historical unaudited consolidated statement of operations for the Trust for the nine months ended September 30, 2013.
|
(O)
|
Reflects the combined historical unaudited revenue and certain expenses of the Acquired Properties for the nine months ended September 30, 2013.
|
(P)
|
Pro forma income per Common Share is calculated in accordance with relevant accounting guidance for participating securities and the two class method and is based on the weighted average number of Common Shares outstanding during the nine months ended September 30, 2013. The reconciliation of earnings attributable to Common Shares outstanding for the basic and diluted earnings per share calculation is as follows:
|
For the Nine Months Ended
|
||||
September 30, 2013
|
||||
Income from continuing operations
|
$ | 21,161 | ||
Loss attributable to non-controlling interest
|
2,785 | |||
Preferred dividend on Series D Preferred Shares
|
(8,360 | ) | ||
Amount allocated to Restricted Shares
|
(231 | ) | ||
Income from continuing operations applicable to Common Shares
|
15,355 | |||
Income from discontinued operations
|
8,025 | |||
Net income attributable to Common Shares
|
$ | 23,380 | ||
Basic weighted-average Common Shares
|
33,047 | |||
Income from continuing operations per Common Share - Basic
|
$ | 0.46 | ||
Income from discontinued operations per Common Share - Basic
|
0.24 | |||
Net income attributable to Common Shares - Basic
|
$ | 0.70 | ||
Basic weighted-average Common Shares
|
33,047 | |||
Stock options
|
2 | |||
Restricted Shares
|
40 | |||
Diluted weighted-average Common Shares
|
33,089 | |||
Income from continuing operations per Common Share - Diluted
|
$ | 0.46 | ||
Income from discontinued operations per Common Share - Diluted
|
0.24 | |||
Net income attributable to Common Shares - Diluted
|
$ | 0.70 |
WINTHROP REALTY TRUST
|
|||
By:
|
/s/ Michael L. Ashner | ||
Michael L. Ashner
|
|||
Chief Executive Officer
|
|||